Jan. 17, 2013 – Credit unions learned about how they can avoid legal and regulatory headaches when working through third-party vendors during NAFCU’s webcast Wednesday, “Managing Credit Union Vendor Due Diligence.”
Led by Amanda Smith, the webcast included a discussion about how to establish an effective vendor management program and what that program should entail. Credit unions should review and negotiate their vendor agreements with care, Smith said, as well as review vendor due diligence annually and when renewing the contract.
While certain risks cannot be eliminated altogether, Smith said, credit unions can significantly mitigate these with proper due diligence and vendor management.
To manage these relationships effectively, Smith said that credit unions should:
- perform a thorough background check on all vendors;
- establish ongoing expectations and compare the vendor’s performance to these expectations;
- develop policies and procedures, and implement ongoing controls over vendor relationships;
- implement quality control procedures to review the vendor’s performance periodically;
- appoint a person to manage the vendor(s) and report to credit union officials about the relationship; and
- review vendor performance quarterly and due diligence annually and whenever contracts renew.
Wednesday’s webcast is archived and will remain available for one year.